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Bookings Growth Boosts CA Shares

The stock rises on raised full-year guidance.

SAN FRANCISCO - CA (CA) - Get CA, Inc. Report missed fourth-quarter earnings expectations due to a special tax charge, but investors were pleased by solid bookings growth, which boosted the company's full-year guidance.

Shares in the Islandia, N.Y., software company were up $1.27, or 5.3%, to $25.44 in extended trading after the company's forecast topped the Street's expectations.

Bookings rose 30% year over year to $1.47 billion, prompting the company to issue strong projections for 2009, CFO Nancy Cooper said on the conference call.

For fiscal 2009, the company projected revenue of $4.5 billion to $4.6 billion and EPS, less items, of $1.45 to $1.52. Analysts were expecting revenue of $4.42 billion and EPS, excluding items, of $1.32.

For the fourth quarter, CA posted revenue $1.09 billion, up 8% from $1.01 billion for the same quarter of 2007. The consensus estimate of analysts was $1.09 billion, according to Thomson Reuters.

Net income was $71 million, or 13 cents a share, vs. a loss of $20 million, or 4 cents a share, in the year-ago period.

Excluding special items, EPS was 22 cents. Analysts were looking for 28 cents. The company took a special tax charge during the fourth quarter that hurt EPS by 6 cents, giving the company a tax rate of 52.6% for the period, vs. guidance for a 36% rate, Cooper said.

The tax assessment was the first move of a new specialist hired in December who is expected to bring a more tax-efficient approach to operations, Cooper said. "We're subject to income taxes in a number of jurisdictions." The company is moving away from country-based offices to regional centers, giving CA the ability to base in locales with lower costs.

"There may be some short-term costs that position us for long-term savings" on taxable expenses, Cooper said. Planning and a restructuring should put CA's tax rate more in line with industry norms. "I can't give you a finite time, but we will get there," she added.

CA expects to take $120 million in restructuring charges in fiscal 2009 as the company closes some offices, and about $40 million in 2010, Cooper said.

The restructuring has already improved the bottom line. Expenses before interest and income taxes for the quarter dropped 8% year over year, to $935 million. Administrative expenses dropped 17%, to $152 million.

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For the quarter, cash flow from operations was up 32% year over year to $690 million. Cash flow benefited from strong collections and bookings and from having "a very large receivable flop into the fourth quarter," Cooper said.

The company had cash and equivalents of $2.8 billion and net cash of $214 million at the end of the fiscal year. CEO John Swainson said the company always has acquisitions on its "radar screen," but has done little till now "because we think we have a very complete portfolio." CA is unlikely to spend its "precious cash" on buyouts in the $1 billion range, he added.

Bookings during the quarter were strong across the company's lines of products, Swainson said. "We are at the beginning of a strong mainframe-upgrade cycle," especially on


(IBM) - Get International Business Machines (IBM) Report

new z10 model. "We're the only

independent software vendor I know of that had early delivery of the z10," Swainson said. "We expect the cyclical trend from the mainframe give us a ... tailwind."

In infrastructure-management software, the company competes with